King Roberto of Naples, an ally of the Pope and major depositor to the Peruzzi, was concerned that Florence was possibly drifting away from the papacy. Not taking any chances, he withdrew Neapolitan capital from the Peruzzi.[1] By 1343 a populist government seized power in Florence and revoked the Peruzzi’s protections against its creditors. Finally, on October 27, 1343, the Peruzzi declared bankruptcy and handed over their books to the communal government rather than face their creditors.[2]
How did the Peruzzi family fare in the chaos? Surely, with their vast wealth they must have survived comfortably. That is only partially true. The members of the family most closely involved in the business escaped Florence and the remaining members remained in relatively high standing socially. They continued serving in Florentine government, remained in the top quarter of tax assessments (with some in the top ten percent), and produced some successful businessmen like Pacino di Arnoldo.[3]
The suffering of the family, while not necessarily material, was instead mental and emotional. Credit was a personal affair in Florence. Creditors often lent to each other but did not cancel out mutual debts. Instead, they opted to let credits flow back and forth between each other creating “reciprocal credits”, and sometimes more complex “multiple credits”. These types of credit made up 63% of credit in the high-volume merchant banking sector, which the Peruzzi certainly operated in. Thus, creditors were likely to have close, personal relationships with one another based on high levels of trust and were adept social networkers. In letters, the word for “to lend” was credere, which also means “to believe in” and carried connotations of honor and trust. Florentines also drew a close connection between profit and friendship. In Renaissance Florence, money could buy friends and friends helped make profits. Florence was also not a large city, with only 37,246 residents in 1427. Thus, it is highly likely that most businessmen knew each other. In fact, gossiping about the honor of other businessmen through whispers and letters was key to how impressions were made.[4]
Thus, it was certainly traumatic for the Peruzzi to lose the business that bore their name. Even if some honor was still intact for them, as seen by the fact that they continued serving in government and some individual Peruzzi’s continued individual business ventures, things would never be the same. The company was a platform for a huge volume of transactions and the hub for innumerable personal relationships. Without the same volume of business transactions and profits, it is likely many of the family’s business friends were lost over time. The company’s failure would have been known by the entire business community and for the Peruzzi’s to adjust to no longer being the biggest name in town would inevitably be a challenge. One can only imagine the gossip among the business community about the Peruzzi family and its honor as they went through painful bankruptcy proceedings. They were forced by the courts to pay back 36¼ % in land and assets up from the originally agreed 20% of their creditors’ investments. While they certainly escaped with their lives and wealth intact, it is without a doubt that their status, reputation, and relationships were greatly diminished by the failure of their company. This is further shown by the fact that the family didn’t close the business when the decline began but made the economically unsound decision to increase investment from 1335 to 1343 and put large amounts of labor into the failed venture with Edward III.[5] The family could not leave their intimate world of connections and stayed with the business through the entirety of its troubles, only leaving when they finally declared bankruptcy. It was a personal struggle hard fought and hard lost.
[1] Michael Veseth, Mountains of Debt and the Heart of Florence (Oxford University Press, 1991), https://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780195064209.001.0001/acprof-9780195064209.
[2] Hunt, The Medieval Super-Companies, 228-229.
[3] Hunt, The Medieval Super-Companies, 35.
[4] John F. Padgett and Paul D. McLean, “Economic Credit in Renaissance Florence,” The Journal of Modern History 83, no. 1 (2011): 1–47, https://doi.org/10.1086/658247.
[5] Hunt, The Medieval Super-Companies, 240-241.
